Bitcoin’s Trading Pair Experiences Sudden Drop to $24,000: Caution Advised

The BTC/USD1 trading pair on Binance faced a rapid flash crash, causing Bitcoin's price to plummet to $24,000 before it quickly bounced back.

Key Takeaways

A brief drop in the BTC/USD1 trading pair on Binance led to Bitcoin's price falling to $24,000.
The event exposed risks associated with low liquidity, particularly for newly released trading pairs.
During the flash crash, trading volumes were low, and speculation arose about the incident being a liquidity test.
Increased volatility can occur in bear markets, leading to temporary price discrepancies.
The BTC/USDT trading pair is less likely to experience similar flash crashes due to its high liquidity.

Although this event did not impact Bitcoin prices on major trading pairs like BTC/USDT, it raised concerns about liquidity risks tied to newly launched trading pairs.

Flash Crash Highlights Low Liquidity Risks

Market data from Binance showed that the incident lasted just a few seconds, with the BTC/USD1 price stabilizing at over $87,000 shortly afterward. The USD1 is a new stablecoin backed by World Liberty Financial and supported by the family of former US President Donald Trump. Charts from Binance displayed a steep wick, but the flash crash did not trigger any liquidation concerns.

This event occurred during the Christmas holiday season when trading volumes typically dwindle. Some analysts suggested that the drop might have been a liquidity test for the BTC/USD1 pair. Joao Wedson, founder of Alphractal, noted that such volatility tends to arise more frequently in bear markets when capital inflows diminish.

"Low liquidity in various trading pairs across multiple exchanges can lead to sudden volatility, causing temporary price dislocations and arbitrage issues," explained Wedson. "These occurrences are more common than one might think during bearish market phases."

A more in-depth explanation from the investor community connected the incident to Binance’s promotional campaign for USD1. The exchange had recently launched a promotion offering a 20% annual percentage yield (APY) for USD1 deposits, which led to a spike in USD1 supply—over 45.6 million tokens were issued within hours, raising the total market capitalization to more than $2.79 billion.

The surge in capital flow into USD1 caused a 0.2% increase in its price.

An investor on X, known as Punk, remarked that many traders engaged in arbitrage. They borrowed USD1 and gradually sold it in the spot market to participants in the promotion. Meanwhile, other traders opted to use the BTC/USD1 pair for selling, and the thin liquidity caught many off guard, leading to significant price drops.

"This is merely a minor fluctuation in the bear market. There’s no cause for alarm. More similar fluctuations may occur in the future," Punk added.

Could BTC/USDT Face a Similar Scenario?

This incident raises a broader question: Could the same happen to the BTC/USDT pair, which is known for its high liquidity? A sudden drop in this pair could lead to significant liquidation losses.

Analyst Maartunn referenced data from Kaiko, pointing out that Bitcoin’s 1% market depth has improved considerably over the years. "Market depth hasn’t just recovered; it has expanded. By October 2025, the Binance 1% depth exceeded $600 million, surpassing levels before the crash in 2022," Maartunn explained.

He further emphasized that the decline in BTC/USDT prices has not affected liquidity. Over more than 100 days, the BTC/USDT pair saw a 21.77% drop (from $110,291 to $86,089), yet daily spot volume averaged $19.8 billion, amounting to a total of $613.5 billion.

Given the deeper market depth and substantial volume, a repeat of the flash crash in BTC/USDT is unlikely. However, this incident serves as an important reminder for traders to exercise caution when selecting trading pairs. Low-liquidity pairs can lead to severe slippage and unexpected losses.